10 {{ upvoteCount | shortNum }}
10 {{ upvoteCount | shortNum }}

Should I charge tax

by JohnnyBattles
8 replies
When you invoice your customers do you charge a flat fee or do you include taxes? My first thoughts is to charge taxes so I don't have to dip into my profits when it comes time to report my taxes but I am not sure what the "industry" standard is.

Sure, I could find a tax person and ask them but I would rather hear from your experience first.

For example,

$1997

-or-

$1997 + tax

Thanks!
jb
#charge #tax
  • Profile picture of the author agkfl
    It really depends on how good you are selling yourself when selling your product to tell you the truth.

    Ether way if you show, or dont show taxes on your recipt, you "should" be paying your gov taxes on the back end if you have a legit company set up, from what you say it seems you are paying. Yes, I know some don't pay taxes on all sales when you work for yourself, but thats the risk you take.

    Remember, $1997 looks better then $2237 visually and sub conciously looks better to the buyer if they are thinking they are getting taxes waived.

    If you are feeling you are *Dipping into your profit* then you need to re evaluate your costs/volume needed to be bought, and how much you are willing to make for the product your selling. Your only feeling sellers remourse for the taxes you have to pay out to the gov up front. Think as that money LOST and find your comfort zone with how much your making per unit, or per lot your selling.
    {{ DiscussionBoard.errors[6124412].message }}
  • Profile picture of the author Warrior Roy
    There is a good chance the IRS and your state of Ohio (if that's where your business is based) will be expecting your to pay taxes. Many states are going after Amazon to pony up taxes for all products sold in all states, but so far they have only had to pay taxes for sales in their state of incorporation.

    The fed and the states are all hurting for cash, so expect them to ask you to contribute.
    {{ DiscussionBoard.errors[6124459].message }}
    • Profile picture of the author agkfl
      Originally Posted by Warrior Roy View Post

      There is a good chance the IRS and your state of Ohio (if that's where your business is based) will be expecting your to pay taxes. Many states are going after Amazon to pony up taxes for all products sold in all states, but so far they have only had to pay taxes for sales in their state of incorporation.

      The fed and the states are all hurting for cash, so expect them to ask you to contribute.
      Hes not asking to avoid taxes all together, hes asking on a selling strategy, what works better, having a flat price, and pay taxes on the back end at tax time, or show taxes up front.
      {{ DiscussionBoard.errors[6124688].message }}
  • Profile picture of the author beb19
    What are you selling that you plan to charge sales tax for?

    The reason I ask, is because the typical things that someone in this forum would offer would not require you to charge sales tax in Ohio.

    Obviously, you want to do you're own research and talk to a CPA, but from my understanding if there is no exchange of physical goods, (at least in Ohio) generally a vendor is not required to charge sales tax. So if you design a website for someone, you shoudn't have to charge it (SEO, other marketing services included).

    You may already know this, but I figured it was worth bringing up just in case.

    Ben
    {{ DiscussionBoard.errors[6125184].message }}
  • Profile picture of the author MarlboroMonkey
    Just figure taxes into your asking price. No need to lay it out separately on the bill or receipt.
    Signature
    SentientAds.com - The Evolution of Display Ads
    {{ DiscussionBoard.errors[6125316].message }}
  • Profile picture of the author Adwizard
    beb19 is absolutely correct... no sales tax in Ohio unless exchange of goods... unless this has changed in the last few years.
    Signature
    Building Businesses Beyond their Four Walls by
    Thinking Outside the Box... since 1993.
    Is anyone capable of designing a mobile site for
    this e-commerce site for a fee:
    {{ DiscussionBoard.errors[6126106].message }}
    • Profile picture of the author JohnnyBattles
      Thanks everyone, that's exactly the kind of advice I needed. I am selling digital services (web design/marketing) so according to the law in my state I don't need to charge. However its something I need to think through building into my pricing as I have the potential of doing work for people out of state.

      I think building a flat tax rate into my pricing, say 10% might be better rather than trying to determine what the tax rates are in every state and county.

      And yes, I am learning now the difference of tax reporting with my LLC rather than the s.p. I had which from what I understand varies by state.

      The one thing I would never do is falsify my earnings. That's just not good business.

      jb
      {{ DiscussionBoard.errors[6126814].message }}
      • Profile picture of the author agkfl
        Originally Posted by JohnnyBattles View Post

        Thanks everyone, that's exactly the kind of advice I needed. I am selling digital services (web design/marketing) so according to the law in my state I don't need to charge. However its something I need to think through building into my pricing as I have the potential of doing work for people out of state.

        I think building a flat tax rate into my pricing, say 10% might be better rather than trying to determine what the tax rates are in every state and county.

        And yes, I am learning now the difference of tax reporting with my LLC rather than the s.p. I had which from what I understand varies by state.

        The one thing I would never do is falsify my earnings. That's just not good business.

        jb
        You do not need to charge tax for a state/province/country if you do not have a registered work address in that particular area. Since you live in Ohio, and your business is in Ohio, you need to charge the applicable tax for your area when doing business in your area if it applys. Also keep in mind, dont show tax collected on a recipt and not give the cut to the government. Thats a different type of no no. If you want to charge tax you can, but you need to file the tax collected and get your returns at the end of the year. Though, check and refrence your tax court in your area before doing so.
        {{ DiscussionBoard.errors[6127357].message }}

Trending Topics